Surge in proportion of landlords planning to buy

Terraced housing topped the popularity list of those looking to buy, with 74% of landlords stating that they intended to purchase this type of property, followed by semi-detached housing, flats and detached property.

However, mortgage finance remains a major obstacle. Four out of 10 landlords said that they attempted to secure buy-to-let finance for purchase or remortgage purposes during the second quarter. Of those that did, 52% said that it was more difficult than previous attempts to secure finance, with just 13% stating that it was easier. The remaining 35% said they noticed no difference in the availability of finance.

The Trends research showed that a wider availability of mortgage finance was the main factor that would encourage a landlord to expand their portfolio. Nearly half (46%) said wider mortgage finance would encourage them to expand their portfolios, followed by better tax incentives (43%) and sustained levels of tenant demand (42%).

Less important factors were greater levels of Government support (26%) and property supply (14%).

John Heron, Paragon Mortgages’ managing director, says:

‘There has been a significant jump in the percentage of landlords looking to purchase property, which reflects the increased level of confidence across the landlord community. Tenant demand is strong and expected to grow in the coming years because of significant socio-economic and demographic changes, such as a rising population and growing numbers of net migration, one person households and students.

‘However, there remains a dislocation between landlords’ desire to purchase property and their ability to do so. Accessing mortgage finance remains difficult for a large number of landlords. We have seen new entrants into the buy-to-let market, but the criteria attached to the majority of buy-to-let mortgages is targeted at small scale investors rather than professional landlords. If the market, and the private rented sector, is going to expand, then criteria needs to be adapted to allow larger-scale landlords to grow their property businesses.’